“How do I set my prices?” I get this question all the time. Have you ever wondered how to set your price or how much you’re worth? What about how much you’re losing or how much you’re spending? Look, there are many different factors that go into setting your prices. These range from market factors, to business costs, to the expertise required for the service you are selling. You also need to speak to your value. As a consultant, you are being paid for your expertise. Whether you’re an aspiring or established consultant, this information will be powerful to help you maximize and satisfy your clients.
The price of your service or product is based on three basic production costs:
Basic materials
Labor & Overhead
General Operating Expenses
Profit is something that we plan for.
This has to be included inside of your projections. We all know that there is never any money left over, so we have to plan for it. You need to really determine how much profit you are going to have. Determine your break-even costs before deciding on your ideal profit. Pricing is a complicated process, and you want to remain competitive as well as profitable. You may decide to ask an expert on how to set your prices, as they are you customer’s first glimpse into your experience and your value.
Pricing is an expression of value, so low rates doesn’t always lead to work or respect.
I’ve done that before. I’ve charged too little and it discredited me. Pitching yourself on the low end just to undercut your competitors won’t always serve you well. There is no reason to shy away from a higher rate that accurately communicates your expertise, your knowledge and your experience.
It’s important to keep in mind that clients are paying for your expertise and your intellect, not your time.
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